Manulife Offers No-Load Fund
For Investing in Greater China

Philip Hampden-Smith, president of Manulife Funds, said the new vehicle will invest in China-related stocks in Hong Kong, the mainland and Taiwan. This offering bolsters Manulife Funds' range of funds to 13. Manulife Funds is a year-old unit of Canada's largest life insurer, Manulife Financial. In total, the unit manages $120 million.

The new China fund will be managed by a third-party fund manager, Cheah Cheng Hye, who is the managing director of Value Partners Ltd., a local money-management firm. Mr. Cheah is known for his value approach to stock picking, seeking out inexpensive shares of companies that have strong management and a clear business focus. Often, Mr. Cheah ends up purchasing small- to medium-capitalization stocks.

"I want this to be the most boring China fund in the market," Mr. Cheah said. "Most typical China funds are momentum funds that rush in and out of the market. [We're looking] for the right business, right people and right price."

The time is ripe to buy into China because most stocks are very inexpensive, Mr. Cheah said, adding that Chinese stocks have been in a bear market since 1994. What's more, export growth is robust and fixed-asset investment is likely to climb 15% in 1998. He predicts economic growth in China will be 8% this year.

Like Manulife's other funds, the China Value Fund will be no-load, meaning it won't charge an initial investment fee. An annual management fee of 1.5% is charged. If an investor withdraws money within two years of a purchase, a 1% redemption fee will be charged. The minimum investment required to enter the fund is HK$5,000 (US$645).

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UOB Asset Management of Singapore said it will be the subadviser to Switzerland-based Vontobel Asset Management AG's new fund called Vontobel Fund-Far East Equity.

Uobam, which is the asset-management arm of United Overseas Bank Ltd., said the appointment marks the first time the company will be advising another fund-management company. Vontobel is a wholly owned unit of private banking group Vontobel Holdings AG. The Swiss group manages about $30 billion of funds.

Uobam said the Vontobel Fund-Far East Equity -- which is the latest addition to Vontobel's Luxembourg-based umbrella fund called Vontobel Fund Sicav -- will invest in equities and equity-like securities issued by Asia-based companies, excluding those based in Japan. The fund is designed for investors seeking long-term high capital growth through a broadly diversified portfolio denominated in U.S. dollars, Uobam said.

Vontobel Director Christopher Straessle said the company's rationale behind the launch of the new fund was the relatively low stock prices in Asia. "The banking and financial turmoil in Asia has resulted in prices plunging on the region's stock markets," he noted.

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China Southern Securities and Guotai Securities, two leading Chinese brokerage firms, will launch new investment funds Monday through initial public offerings, state media said.

The Kaiyuan Investment Fund and Gintai Investment Fund, managed by Southern Securities and Guotai Securities, respectively, will be closed-end funds with maturities of 15 years. The IPOs are valued at two billion yuan ($241.6 million) each and will be offered to domestic individuals through special trading accounts set up at the state-owned Industrial & Commercial Bank of China, the Xinhua news agency reported.

After placements are complete, China Southern Securities and Guotai Securities will apply to have the funds publicly listed on the Shanghai and Shenzhen stock exchanges, Xinhua said.

The long-awaited funds mark China's formal entry into the fund-management industry. They follow by several months the publication of industry regulations that China hopes will pave the way for a new generation of investment funds to tap into the 4.6 trillion yuan of bank deposits held by Chinese.

Dozens of other mainland brokerage firms are lobbying for approval to launch mutual funds, and two or three other firms are expected to win approval this year. Citic Securities, a unit of the central government's China International Trust & Investment Corp., is expected to gain approval shortly, senior industry sources have said.

China already has some 80 official investment funds that invest in the domestic stock markets in Shanghai and Shenzhen. But they are poorly regulated -- many have large property investments -- and domestic investors view them more as short-term speculative investments rather than long-term growth vehicles. Most are trading at more than 100% premiums to their net asset values.

With the new mutual funds, China hopes to change that. According to Xinhua, the funds will be required to invest 20% of all capital in the domestic bond market and 80% in stocks.